MTIC Fraud is short for Missing Trader Intra-Community Fraud. It is a type of tax fraud in which fraudsters exploit VAT rules by collecting VAT on goods or service they provide and then disappearing without accounting to HMRC for that VAT.
If you are caught up in a MTIC fraud or have any other type of HMRC-related legal issue with which you need support, speak to us. We have a team of dedicated HMRC solicitors and barristers, all of whom are leaders in their field, who specialise in providing advice to individuals and businesses dealing with HMRC and Border Force issues. We couple our technical legal expertise with a decidedly commercial approach and will strive to minimise any disruption to your business while addressing the issue as swiftly and effectively as possible.
For a confidential free discussion, call us today on 01908 414990, alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.
How does MTIC Fraud work?
When the UK was part of the EU, MTIC fraud mainly involved fraudsters exploiting the free movement of goods principle. They would start by purchasing high-value goods from a supplier in a different member state, on which they were not charged VAT. Those goods would then pass through a supply chain on which VAT was charged before the fraudster disappeared with the VAT it has collected.
Now the UK has left the EU, MTIC fraud still occurs, but usually in different guises, such as through a chain of domestic transactions.
What are the penalties for MTIC Fraud?
The penalties for MTIC fraud are severe. VAT evasion is an offence, carrying a penalty of six months in jail and a fine of up to £20,000 in the Magistrates Court and seven months in jail and an unlimited fine in the Crown Court.
In addition, MTIC fraud may constitute the common law offence of cheating the public purse. In theory, anyone found guilty of cheating the public purse can be sentenced to life imprisonment and an unlimited fine. While life imprisonment is an unlikely outcome, anyone found guilty of the offence may still face a long stretch in prison.
What happens if you get caught up in MTIC Fraud?
The government places the onus on businesses to question the legitimacy of the transactions they take part in. If HMRC uncovers MTIC fraud and concludes that members of the supply chain ‘knew or ought to have known’ about the fraud, it can refuse to allow those businesses to deduct income tax. It may also impose a penalty of up to 30% of the lost VAT.
Unfortunately, since the perpetrators of MTIC have often vanished by the time the fraud comes to light, HMRC frequently pursues those caught up in the fraud on the basis that they ‘knew or should have known’ that the transaction was fraudulent. If you face such allegations, your main defence will be to prove that you undertook sufficient due diligence on your trading partners and the transaction before proceeding.
Examples of the types of checks that might be required include the following:
- Checking the business’s VAT registration certificates and incorporation documentation.
- Checking the business’s VAT registration details with HMRC.
- Asking for trade references.
- Carrying out credit checks.
- Insisting on personal contact with senior officers within the business.
- Visiting the business’s premises.
Crucially, merely paying lip service to these checks is not enough; you must take the appropriate action based on what you find. If your investigations uncover anomalies, such as the business making an unusually large profit in a short period of time or operating from a residential address, you must investigate further and establish whether there are innocent explanations for the irregularities. If you don’t, and if you proceed with the transaction anyway, you may struggle to prove that you had no way of knowing that the transaction was fraudulent.
How we can help if you are implicated in a MTIC Fraud
HMRC takes any instances of MTIC fraud extremely seriously. If you have been caught up in a fraudulent supply chain or have reason to believe that you may have been, expert legal advice is essential. By addressing the issue head-on and instructing specialist solicitors like us early, you stand a far better chance of securing a lenient penalty from HMRC if it transpires that your concerns are borne out.
We have decades of experience in HMRC-related legal matters and have developed a thorough understanding of its policies and procedures. We will advise you on your legal position and options and provide first-class representation throughout the matter. We offer straightforward advice in plain English at highly competitive rates, and will work tirelessly to achieve a favourable result as quickly as possible.
For a confidential free discussion, call us today on 01908 414990, alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.
